Hard fork
A hard fork is a change to a network's rules that old software cannot accept. Nodes that do not upgrade stop recognising new blocks, and when enough disagree the chain splits into two separate networks.
How it works
A blockchain's rules live in node software. If a change widens what is allowed — a larger block size, say — old nodes will treat the new blocks as invalid. There is no compatibility in either direction.
What happens next depends on how many switch. If nearly everyone does, the old chain simply dies and it counts as a routine planned upgrade. If the community splits, both chains continue, each with its own coin.
Holders at the moment of the split end up with a balance on both networks, since the history before the fork is shared. That is how Bitcoin Cash appeared in 2017, and Ethereum Classic in 2016 after a dispute over reversing funds stolen from The DAO.
What it means for a holder
- Coins duplicate, value does notThe balance appears on both networks, but the market divides the value between them rather than doubling it.
- Replay riskWithout replay protection a transaction on one chain can be repeated on the other. The first days after a fork are best sat out.
- Forks attract scams"Claim your fork coins, enter your seed phrase" is a standard scheme. A real fork asks for none of your keys.
- Most forks are routinePlanned network upgrades are technically hard forks too. A split is rare and usually caused by a dispute rather than by the code.